Recent news
reports suggest that certain Indian cars have failed to comply with the
standards of crash test conducted by Global Car National Car Assessment
Programme (GNCAP). On top of that, there have been news reports stating that
Japanese car manufacturer, Suzuki, found discrepancies in its fuel and
emissions testing but denied any cheating. Suzuki said that its testing method
did not comply with Japanese regulations but the results are not materially
impacted. About a month ago, Mitsubishi of Japan admitted that it had been
manipulating fuel economy record of its automobile models for several years, a
news which caused a serious erosion of its market capitalization. Only a few
days ago, Nissan of Nissan-Renault alliance announced a 34 percent strategic
stake in Mitsubishi to stabilize the company. These follow the infamous
Volkswagen emission scandal that came to light in February 2015 involving
tampering with of software code of engines fitted on millions of cars to show
the vehicles to be in compliance of regulatory standards. A few other
manufacturers are reportedly involved in such errors, discrepancies or
manipulations.
These high
visibility cover-ups pertaining to product quality come on top of several
recalls that have been prominent in the automobile industry, covering both
vehicle manufacturers (GM, Toyota, Honda etc.,) and component makers (Firestone,
Takata etc.,). Nor is this a new trend. A review of available literature
reveals that automotive manufacturers including the Big 3 of USA and other
European makers were beset by problems of quality and non-compliance since the
1940s. India had its own incident when Standard Motor had to close shop in late
1980s as a result of alleged violation of fuel efficiency norms and
concessional customs duties. Most of the issues pertain to fuel economy and
safety. Flouting of governmental regulations is by no means confined only to
automobile industry. Nestle has been in the eye of a perfect storm in India in
2015 because of alleged non-compliance of its lead product, Maggie, with label
claim. These incidents which make or mar not merely reputation but even the
very existence of a company bring out the importance of testing and
homologation in industries.
Testing and homologation
Testing is the
process of evaluating a product, system or their components with the intent to
find out whether they satisfy the prescribed specifications or not. Testing is
an integral part of an overall quality system which comprises a series of
policies and procedures to identify compliance to specifications, identify gaps
and potentially suggest measures to remediate and improve. Testing is just not
an internal commercialization requirement for a company. It is required for
homologation, usually of an end-product. Homologation is the official
confirmation and approval by the regulatory authorities of a country that the
product meets the prescribed regulations and laws besides the company’s own
specifications and claims. Every nation tends to have its regulatory agencies, rules
and procedures and testing agencies. A manufacturer based in India and
marketing in India must necessarily meet Indian regulations. The manufacturer
must also meet testing and regulatory protocols of all the nations to which its
products are exported.
In addition to
the above, in case technology is imported, the standards of the country
supplying technology need to be followed. In certain cases, certain desirable
global standards need to be met voluntarily for establishing product and brand
equity. In today’s globalized and networked production system, fine-tuning
design and manufacturing to meet the requirements of multiple nations is a
critical requirement. The requirements of testing and homologation vary across
industries. They are most complex and long drawn in the pharmaceutical industry
relative to any other industry. Regulators in pharmaceuticals, especially of
US, EU and Japan, focus on development and manufacturing controls through
physical inspections as much as product approvals based on exhibit batches and
dossier reviews. In other industries product certifications are all that are
required. That said, given the critical importance of testing and homologation,
and emergence of testing and regulatory agencies in various countries, companies
must evolve new approaches to the domain. Some suggestions are made below.
Six principles for effectiveness in testing
and homologation
In most companies,
regulatory affairs, new product testing and homologation are parts of R&D
setup, mainly because of the developmental nature of these activities, and the
impact these three departments have on specification and product development,
and vice versa. That said, there should be strong interface between mainstream
functions such as manufacturing, sales and service with these three different
departments to ensure that results are interpreted in terms of actual site
manufacturing and field usage conditions. This collaboration needs to be more
than just baton passing but must be more in the nature of collaborative hand-holding,
while challenging the proceedings and providing solutions, based on every
perspective. Six principles for assuring effectiveness and integrity in testing
and homologation are discussed below.
Developmental quality
assurance
While quality
is generally considered paramount in companies, quality is not fully understood
and executed well in an R&D context. This paradox arises from the fact that
most of the R&D work is experimental and developmental, and not
standardised and repetitive, in nature. The paradox can be resolved through
developmental quality assurance (DQA) which understands the specific uniqueness
of R&D but imposes the rigour of quality on development and testing. To
ensure that testing and homologation absorbs the full rigour of mainstream
quality function, DQA professionals must be from mainstream quality function
but with an exposure to uniqueness of R&D. The focus needs to be on
calibration of equipment, prescription of standard testing procedures, cross-calibration
of equipment, processes and conditions encountered internal simulators,
external simulators and actual running conditions.
Concurrent quality
management
The
developments with the automakers indicate the need for concurrent quality
management as a concept that is as important as concurrent engineering. Just as
quality cannot be inspected but needs to be produced, it also has to be an
integral part of design to delivery process, from specification setting to
homologation. This requires that the focus of concurrent engineering must
change from current ‘first to market’ to ‘right and first to market’. Most
designs involve incremental changes, with an eye on performance improvement or
cost reduction. Some of the best practices of change management such as
justifying a change and making an exception report when it fails to meet up to
the expectations would help in ensuring concurrent quality management.
Global product
development
Many of
homologation issues are both a corollary and a fallout of globalization
imperatives. Globalization enables customization of products to meet different
markets but it also carries certain risks when cross-platforms are used across
countries. An evolved global product development system which designs products
for the minimal and maximal conditions of testing and performance, globally
relevant, ensures that such products are backed by globally sustainable product
platforms. These could relate to meeting more stringent crash tests, using less
evolved fuels, more punishing road conditions, and so on. Global product
development will also require a very strong global regulatory department which
is well-versed in the operating conditions, and homologation requirements of
different countries.
Software as
hard-stop
Today’s
products, especially the automotive products, incorporate more software than at
any time. This trend is only likely to increase in future. As the examples
quoted in the early part of this post demonstrate, software is one aid for
manipulation too. It is important to develop not only bug-free and hack-proof
software to ensure safety and privacy of automobiles and their users but also
make it traceable and manipulation-proof. CXOs in charge of R&D and product
development must integrate software development and error-proofing, including
artificial intelligence, sensor technologies and robotics as part of R&D
tool kit.
Quality as board
audit function
Importantly, there
is a need to make quality as an important responsibility of the functioning of the
board of directors of a company. All boards today have audit committees to
review finances and financial governance as also monitor internal controls in a
company. Keeping mala fide intentions aside, financial outcomes are nothing but
a resultant of operational integrity. Quality is the sentinel of operational
integrity. The link between quality and integrity is thus evident. It is,
therefore, important that the boards take upon themselves review of quality as
an essential board responsibility. Product testing and homologation processes in
global diversification strategies must logically merit attention in quality-centric
board functioning.
Organizational positioning
The above
discussion brings out the importance of testing and homologation in making or
breaking the reputation of a company. As Volkswagen episode demonstrates,
slippages in this vital domain can put paid to global leadership ambitions of a
company. And, Mitsubishi episode demonstrates that the very survival and
ownership of a company could be at stake. There is every reason, therefore, to
bring testing and homologation, from the current side play in R&D
departments to the forefront of cross-functional commercialization of new products.
This requires
that testing and homologation is treated as a high technology endeavour and not
as a tail end activity of R&D. This also requires that this function is
positioned with the brightest technical talent which is also exposed to requirements
of different countries, and is taken up as a key delivery by the chief technology
officer of a company. Integrity and competence in testing and homologation is
akin to the role of safety in operations. Its effective presence is the
greatest insurance for success and sustainability of both performance and reputation
of companies.
Posted by Dr CB
Rao on May 19, 2016
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